3.1. Introduction.
This chapter includes a detailed description of the research methodology that was utilized in the study. This study is focused on understanding the challenges faced by SME‘s in securing finance from a lenders perspective. The chapter is arranged to provide a framework of the methodology that was used to conduct the research Firstly the researcher will consider the participants and location of the study, in which we will identify the participants and the geographic location in which the study will be undertaken. The research design, research approaches and data collection strategy will then be discussed. The researcher will then discuss the population, sample and sampling method. Thereafter the data collection instruments involving interviews and semi-structured interviews will be discussed.
This will lead on to a discussion regarding data quality control. The researcher will then give an overview of the reliability and validity of the research followed by a discussion on the data analysis process involving data reduction and data display.
The researcher will highlight the ethical considerations of the study and the limitations of the study. Lastly the chapter will conclude with a summary of the linkages of the main sections of the research methodology.
3.2. Participants and Location of the Study.
The study was conducted in the Ethekwini Metro which incorporates the city of Durban. The participants targeted for the study were senior financial business managers who dealt with SME‘s at financial institutions within the Ethekwini Metro.
These senior managers were targeted because of their experience in dealing with SME finance. Participants who agreed to partake were from Nedbank, First National Bank (FNB), Ithala, and the Small Enterprise Finance Agency (Sefa).
31 3.3. Research Design.
Research design according to Sekaran and Bougie (2013) is to create a structure in which data is collected, measured and analysed using the research objectives as a base. The purpose of the study was to investigate financing of small and medium enterprises (SME‘s) from the prospective of the Financial Institutions as suppliers of finance. The researcher used a qualitative method for the study, conducting interviews with key SME funding specialists at Financial Institutions to gain an insight into the questions under investigation of the study.
3.4. Research Approaches.
There are two approaches that can be used when doing research, namely Qualitative and Quantitative. According to Punch (2013) Quantitative research uses data in the form of numbers or measurement and Qualitative research uses data that is not in the form of numbers but rather words.
The researcher chose to use a qualitative research method as this method allows for exploring and understanding the financial specialist‘s personal experiences and views relating to funding SME‘s.
3.5. Data Collection Strategy.
The researcher in the study is the primary instrument of data collection and analysis. The result of the research is aimed at producing a richly descriptive text highlighting the themes of the research topic giving a clear picture of what the funding specialist‘s views and experiences show.
Merriam (2014) highlights that ―the overall purposes of qualitative research are to achieve an understanding of how people make sense out of their lives, delineate the process (rather than the outcome or product) of meaning-making and describe how people interpret what they experience.‖
32 3.6. Population.
Sekaran and Bougie (2013) refer to ―the population as the entire group of people, events, or things of interest that the researcher wishes to investigate.‖ The population for the study are the financial specialists dealing with SME finance at financial institutions in the Ethekwini Metro. The population considered for the study totalled eight financial institutions comprised of the four main banks, namely Nedbank, Standard Bank, FNB and Absa, three government funding institutions, Ithala, Sefa and the Industrial Development Corporation (IDC) and Business Partners, a private funding institution.
3.7. Sample.
Sekaran and Bougie (2013) mention ―a sample is a subset of the population. It comprises some members selected from it.‖ The sample for this study is selected from the financial institutions however due to the nature of Qualitative research the researcher has used non-probability sampling. The sampling method chosen was used because the researcher did not want to generalize the findings but actively sought out participants who could add specific data and meet the goals of the study. The targeted participants were selected because they were specialists in their field. Initially seven financial institutions were targeted for the sample however three financial institutions declined to partake resulting in a sample of four financial institutions.
3.8. Sampling method.
Non-probability sampling was used for the study as this method is more suitable for qualitative research. According to Chaturvedi (2011) Non-Probability sampling uses the researcher‘s own judgment to select elements of a population which the researcher believes are representative of the population. Purposive, Convenience and Quota sampling are forms of Non-Probability sampling methods Purposive and Convenience sampling will be used for the study. Purposive sampling groups participants according to preselected criteria relevant to a particular research question according to Mack et al (2005). Convenience sampling as described by
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Crossman (2014) is where the researcher selects subjects who are available to partake in a study. This method does have drawbacks as the researcher has no control over the representativeness of the sample. The researcher contacted Nedbank, Standard Bank, Absa and First National Bank (FNB) of which Nedbank and FNB agreed to be interviewed for the study. Specialist financial agencies focusing on SME‘s were also contacted to be interviewed. Ithala and Sefa agreed while Business Partners declined. The process of setting up the interviews was time consuming as ethical clearance had to be obtained before any interviews could be conducted. This involved been given gatekeepers letters from the financial institutions authorizing that their staff could be interviewed. Ethical clearance was given once all the gatekeepers‘ letters had been granted. This process was in itself a type of pilot study because investigations had to be conducted to source the finance specialists at the various financial institutions.
Two interviews were conducted with Nedbank, two with Sefa, one with FNB and one with Ithala totaling six interviews. The interviews were conducted at the financial institutions regional offices. Nedbank‘s, Sifa‘s and Ithala‘s regional offices were situated in Durban and FNB‘s regional office was situated in Umhlanga.
3.9. Data Collection Instruments.
Data collection instruments according to Ruben and Bellamy (2012) are the devices used to collect data. The researcher chose interviews as the best fit for the study as this data collection instrument enabled the researcher to gather relevant data from the finance specialists for the study.
3.9.1. Interviews.
Stuckey (2013) mentions that interviewing is a primary way of collecting data in qualitative research to direct the participant in responding to a specific research question.
Stuckey highlights further that in qualitative studies interviews are frequently used as a means to gain an understanding of a topic through the participant‘s views and experiences. There are various types of interviews that can be conducted such as structured, semi-structured, unstructured and informal.
34 3.9.2. Semi-structured interviews.
The researcher used semi-structured interviews for the study as they guided the interview process using a specifically designed questionnaire focusing on SME finance issues. Each participant was able give their specific views regarding the questions asked and share their answers freely using their own words. This resulted in rich data that could be compared as the research questions were common to all the interviews.
The interviews were conducted individually with the finance specialists at their premises, lasting around twenty minutes each. The interviews were all recorded using the researcher‘s iPad. The recordings were sent to ‗Top Transcriptions,‘ a firm specializing in transcribing interviews. The recordings were transcribed into word documents by Top Transcriptions and emailed back to the researcher for later analysis.
3.10. Data Quality Control.
Rubin (2012) comments that the researcher should ensure their data collection instruments employed should measure the data in a consistent, reliable manner and be valid.
3.11. Reliability and Validity.
When considering reliability and validity in qualitative research the researcher will focus on the consistency, stability and dependability of the data for the study.
Bapir (2014) comments that ‗in qualitative research it refers to the methods of research conducted and to what extent the concepts used, appropriately, describe what they ought to describe.‘ He further mentions ‗that validity in qualitative research concerns the relationship between the data and the construct, the findings and the conclusion, the reality and the representation; in other words, validity is the other name for acceptable social knowledge.‘
The data required for the study was gathered from specialists at financial institutions who gave their opinions on the challenges that SME‘s went through when applying for finance. The opinions were given by experienced financial specialists so the researcher assumed that the information was taken from reliable
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sources which would be relevant to the objectives of the study and hence as reliable and valid as possible.
The researcher recorded all the interviews for the study and each has been transcribed so that the data can be compared with existing findings discussed in the literature review and the interviews were conducted using the same interview guide to create consistency. The responses were the opinions of the interviewees and cannot be considered as bias free. The data was compared to existing literature to therefore eliminate bias and establish consistency and reliability.
3.12. Data Analysis.
Data analysis in qualitative research serves two purposes, firstly to understand the participants views and experiences and secondly to answer the research questions. According to Woods (2011) the analysis of qualitative data includes the identifying, coding and categorizing of themes and patterns contained in the data.
Thematic analysis will be used to identify and extract the themes and patterns from the data. To assist with speeding up the analysis of the data the researcher used computer assisted qualitative data analysis by using the NVivo software package.
3.12.1. Data Reduction.
Data reduction is the first step in qualitative data analysis. To accomplish this the researcher read all the interview transcripts, then re-read them and highlighted similarities and differences. The similarities were given code names and arranged into themes. The transcripts were then imported into NVivo and each was analyzed line by line and as further themes (Nodes) emerged the text relating to the themes was coded.
3.12.2. Data Display.
The researcher using NVivo was able to display the themes by exploring the data.
The preferred method used by the researcher was figures as displayed below in figure 3.1.
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The figure shows the themes with coded data which is presented and discussed in detail in chapter four. The themes that emerged are:
Financing challenges.
Finance options.
Non- financial assistance.
Women specific financing.
Reasons for not receiving finance.
Assistance for helping to receive finance.
Figure 3.1: Nodes compared by number of items coded.
Source: - The researcher, compiled from the transcripts coded data. 2015.
3.13. Ethical Considerations.
Ethical clearance was obtained from the University of KwaZulu-Natal‘s Ethics Committee. Gate keeper‘s letters were obtained from each of the financial institutions before the interviews were conducted. The researcher undertook to ensure the quality and integrity of the research and was given informed consent
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from each of the subjects to the study. The researcher will respect the confidentiality and anonymity of all subjects to the study.
3.14. Limitations of the Study.
The study used qualitative research methods and as such there may have been some bias in relation to gaining a strong academic study as opposed to writing a good story. There may have been some trial and error. Assumptions by the researcher were stated and the study was focused on presenting facts rather than opinions.
3.15. Summary.
This chapter presented the background for the methodology of the study undertaken by the researcher. The aim of the study was to gain an understanding of the obstacles faced by SME‘s in gaining finance from a supplier‘s (financial institutions) perspective. The participants targeted for the study were senior financial business managers who dealt with SME‘s at financial institutions within the Ethekwini Metro. These senior managers were targeted because of their experience in dealing with SME finance. The researcher used a qualitative method for the study, conducting interviews with the financial business managers to gain an insight into the questions under investigation of the study. The researcher in the study is the primary instrument of data collection and analysis. The result of the research is aimed at producing a richly descriptive text highlighting the themes of the research topic giving a clear picture of what the funding specialist‘s views and experiences show. Non-probability sampling was used for the study as this method is more suitable for qualitative research. The researcher used semi- structured interviews for the study as they guided the interview process using a specifically designed questionnaire focusing of SME finance issues. The researcher used the NVivo software package to analyze the data which provided valuable insight into the data. Chapter four will provide a comprehensive presentation and discussion of the data collected.
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